Stephen Gall

Bachelor of Science in Business Administration Program

MGMT 3101: Ethical Leadership

Walden University

Professor Marc Lyncheski, Instructor

April 14, 2006

Apple Computer and its Enigmatic Leader: Steve Jobs

History and Company Position

Steve Jobs was born in 1955 in Los Altos California. He attended Reed College in Oregon but never graduated. He returned to the San Jose area and briefly and went in business with his friend Steve Wozniak building 'blue boxes' which allowed hackers to make long-distance calls over AT&T phone lines for free. [Wikipedia, 2006, search=Steve Jobs]

Jobs left the Silicon Valley scene in 1975 and went backpacking with a friend throughout India, and when he returned he continued to shave his head and wear traditional Indian clothing. He took a job at Atari computers and soon after, again hooked-up with Wozniak to build his vision of a personal computer which they called the Apple 1. The Apple 1 was a prototype which quickly became the Apple 2, the computer that changed the world. [Ibid.]

Apple Computer was founded in 1976. Apple's beginnings are by now legendary as the two Steve's (Jobs and Wozniak) began as a garage operation assembling the original personal computer, and starting the personal computer revolution of the 1980s. By 2005 Apple employed 14,800 people, with revenue of $13.93 billion. Apple still uses a vertically integrated business model, which is unique to the standard industry model. Apple also relies on its closed and propriety systems, also unique when the industry is moving to open systems. The company’s structure is based solely on Jobs’ vision. [[Wikipedia, 2006, search=Apple Computer]

Mission, Vision, and Values

The company has been criticized for being 'personality-driven' by Jobs, and some regard the company as having cult-like features. But Jobs hasn’t always been at the helm.

Sense 1977, Apple has had six CEOs. By 1985, Apple began to lose market share to Microsoft’s Windows and many new competitors, and layoffs had to occur. This caused Steve Jobs to lose a power struggle with John Sculley who was the CEO Jobs had brought to Apple from Pepsi. The company under the tutelage of John Sculley, Apple CEO from 1983 - 93, was as much or more about marketing as about technology. [Wikipedia, 2006, search=Corporate affairs]

Jobs left Apple to start NeXT computers, which had limited success in the marketplace. But in 1997, Apple bought NeXT computer and Jobs was back at Apple, but only peripherally. Apple got in trouble again and Gil Amelio, the CEO at that time, was ousted in another power struggle, this time replaced by Jobs who became the interim CEO. Jobs began a restructuring of the company, introduced a series of new products, and started making strategic acquisitions, all of which got Apple back to profitability.

A large part of the Apple culture is radical customer devotion and brand fanaticism. Although Apple had a disruptive business model due to its introduction of the graphical user interface display, Apple also used a marketing strategy, introduced by Guy Kawasaki, which went beyond traditional marketing to what Guy dubbed ‘evangelism.’ Guy created a core constituency of Apple followers who loyalty to the Apple brand is still legendary. [Wikipedia, 2006, search=Apple Computer]

Apple’s current mission statement is: “Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.” [2006, Apple.com/investor]

No one disputes that Apple is lead by its powerful CEO’s vision, and focus. It is said that Jobs is so fanatical because he deeply believes in Apple Computer and his personal mission is “do it right.” Jobs believes that by making the best quality products possible that sales and stockholder value will follow. [Mercer, 2003] Because of Jobs, Apple is known today for its innovation and style, and many Apple products such as the iPod and iTunes are considered so innovative they have spawned micro-industries.

Leadership Style

No matter what anyone says about his personality or management style, there is little doubt that Jobs is one of America's great entrepreneurs and a bona fide visionary. He is personally responsible for introducing the personal computer with a graphical user interface and mouse. His vision extends beyond computers. After leaving Apple he bought Lucasfilsm's graphics division and turned it in to Pixar. Recently, Jobs became the de facto leader of Disney. His more recent vision includes the Apple iPod.

As a boss, Jobs has been described as both brilliant and intimidating. He is known to be a perfectionist. He is constantly pushing his workers, sometimes setting impossible deadlines. Jobs has even been charged with berating employees before the entire company. Some of his workers have even stated that they are afraid of him.

BusinessWeek has an interesting story that demonstrates Jobs passion:
[…] Minutes after Amelio left the room; Steve Jobs entered and began grilling Jim McCluney, head of Apple's worldwide operations. "O.K., tell me what's wrong with this place," Jobs said. After some mumbled replies, he jumped in: "It's the products! So what's wrong with the products?" Again, executives began offering some answers. Jobs cut them off. "The products SUCK!" he roared. "There's no sex in them anymore!" [Burrows, 2006]

Jobs seems to define the charismatic leader in the Silicon Valley; that of an 'aggressive egotist' who drives development teams using zeal and fear. Jobs can lead through times of ambiguity by focusing the team on his vision of reality. [Berglas, 1999]

"Jobs has earned many awards for the services he rendered to the computer hardware and software industry. He received the National Medal for Technology in 1985 and The Jefferson Award for Public Service in 1987. He was named the Entrepreneur of the Decade in 1989 by Inc magazine. He was also placed 39th on the Advertising Age 'Top 100 Advertising People' list. In 2000, the College of Journalism and Communications honored him with the 'Millennium Award' in recognition of his 'singular professional leadership, vision and creative achievement.' Jobs is a celebrated leader for thousands of people who used Apple products." [ICFAI, 2006]

Culture

As Jobs has matured however, he has started to become more of a consensus manager and team player. He still maintains his passion for creating the types of products that consumers love. "The great thing about Steve is that he knows that great business comes from great product," says Peter Schneider, the former chairman of Disney's studio. "First you have to get the product right, whether it's the iPod or an animated movie."[Helm, 2005]

If Jobs has a formula it starts with a narrow focus on his vision for a product and a faith in his strategy. Jobs has never seemed to worry about Wall Street or if his decision to discontinue or change a product will impact a quarter’s profits. When Jobs returned to Apple, for example, one of the first things he did was discontinue all product lines and focus on just four. "Our jaws dropped when we heard that one," recalls former Apple chairman Woolard. [Ibid.] Jobs insists on creating products that will be the market leader and his belief that ‘killer products bring killer profits.’ Jobs believes hitting a home run is better than being merely a competitor. He maintains a fixation on quality.

Jobs also believes that a small talented team can always beat a larger pool of less talented people, and always tries to recruit top talent. His true talent seems to be in the way he combines technical vision with a feel for what consumers want, combines with a unique and effective marketing style.

Because of Jobs, Apple has built a culture of innovation and remains an incubator of great designs. "Idealism is a major part of Apple," says Andy Herzfeld, an original Macintosh team member. "The company operates for artistic values rather than for commercial purposes." [Ibid]

To complete the circle, Apple isn’t afraid of risk, and often makes final decisions based on personal feel for what the market wants. This risk taking mentality is passed down the ranks as workers are empowered to make decisions at the lowest level. "I learned a lot about empowering people [at Apple] -- pushing responsibility down as far as you can...and letting people loose" says Larry Tesler, a user interface guru who worked at Apple from 1980 until 1997. "You'd show Jobs something and he might look at one part and say that just sucks -- but he never said 'make that button bigger.'" [Ibid]

Ethics and Corporate Social Responsibility

Apple Computer's corporate governance guidelines are focused on the responsibilities of members on the board of directors. Some of those responsibilities include the charter of a corporate governance committee to oversee the functioning of the board. [Corp. Governance Guidelines, 2006] There is little indication that corporate governance is part of Apple Computer's day-to-day business process.

Apple Computer supports a supplier diversity program lead by corporate procurement under Apple's CFO executive sponsorship. The program is monitored by a program board and is subject to internal audit. [Apple Supplier Diversity, 2006]

Apple Computer is keenly aware of human rights violations related to the lack of labor standards in using foreign suppliers, especially in the high-tech and garment industry. Apple has not adopted a code of conduct to address these issues, but does reference the United Nations core labor standards and responsibilities and Apple references a code compliance program that includes independent monitoring and public reporting. We can assume that this would be part of their 302 statement on the annual Sarbanes-Oxley report. [Labor standards, 2005]

Apple Computer acknowledges that computers and components represent a significant threat to the environment. Apple has instigated a responsible recycling program for all of its products. However, the Computer TakeBack Campaign has criticized Apple for not doing enough in this area. Apple is not an industry leader in the area of recycling. [2005 Computer Report Card, 2005]

Apple posts a statement of ethics [Ethics – The way we do business worldwide, 2005] which states in general terms the legal and ethical boundaries that Apple is compelled to follow. Apple's stated policy includes expectations in the following areas:

• to maintain high standards of business conduct

• to be ethical in business dealings
• to avoid conflicts of interest
• to respect confidentiality
• to conduct business within the law
• to conduct business which benefits communities

The Apple statement refers employees to its internal human resources policies and procedures for detailed information. According to Fortune's Most Admired Companies of 2006, among computer companies, Apple is ranked second to IBM, and eleventh overall. [Fortune America’s Most Admired, 2006]


Bibliography

Wikipedia, 2005, http://en.wikipedia.org/wiki/

Apple Computer web site: http://www.apple.com/find/sitemap.html

Mercer, Richard, Dec. 2003, "The Steve Jobs Factor, Jim Hill Media, <<http://www.jimhillmedia.com/article.php?id=812>>

Burrows, Peter, Feb. 2006, "Steve Jobs' Magic Kingdom," BusinessWeek online, <<http://www.businessweek.com/magazine/content/06_06/b3970001.htm>>

Helm, Burt, Sept. 2005, "Apple's Other Legacy: Top Designers," <<http://www.businessweek.com/technology/content/sep2005/tc2005096_1655_tc210.htm?campaign_id=nws_techn_sep16&link_position=link11>>

ICFAI, "Steve Jobs - The Silicon Valley Pioneer," 2006, Center for Management Research, <<http://icmr.icfai.org/casestudies/catalogue/Leadership%20and%20Entrepreneurship/LDEN018.htm>>

Berglas, Steven, "What You Can Learn from Steve Jobs," Oct. 1999, Inc. Magazine, <<http://www.inc.com/magazine/19991001/13575.html>>

"Corporate Governance Guidelines of Apple Computer, Inc." 2006, Apple.com, <<http://media.corporate-ir.net/media_files/irol/10/107357/corpGov/CorpGovGuidelines.pdf>>

“Apple Supplier Diversity,” 2006, Apple.com, <<http://www.apple.com/supplierdiversity/documents/asdppolicy.html>>

"Labor Standards 2005 - Apple Computer" 2005, Apple.com, <<http://www.iccr.org/shareholder/proxy_book05/CONTRACT%20SUPPLIER%20SYSTEM/APPLE%20VENDOR%20STDS%202004-05.HTM>>

2005 Computer Report Card, 2005, Silicon Valley toxics Coalition, <<http://www.svtc.org/cleancc/>>

"Ethics - The way we do business worldwide" 2005, Apple.com, <<http://media.corporate-ir.net/media_files/irol//10/107357/corpGov/Apple_Ethics.pdf>>

"Fortune America's Most Admired Companies 2006," CNNMoney.com, 2006, <<http://money.cnn.com/magazines/fortune/mostadmired/snapshots/114.html>>


//